Income From Salary - Retirement

Course Contents and Description and Objectives:

Meaning of Income from Salary - Retirement

Contents:

1. Any Income shall be chargeable to tax under the head salary if there exists a relationship of employer- employee between the payer and the payee. Example:- Family pension, receipt from Firm by partners, MP/MLA remuneration, Director fees etc.

2. It does not matter whether the employee is a full-time employee or a part time employee.

3. Section 15(1)- salary income shall be chargeable to income tax on due basis or receipt basis which ever is earlier.

4. Salary due on last day of month v/s salary due on 1 st day of next month

Gratuity [Section 10 (10)] : Meaning of Gratuity

Classification of Employee :

Government Employee

Non. Government Employee

Important Note :

1. If gratuity received during the service period then it is fully taxable.

2. If gratuity is received by family member of employee due to death of employee then it is partly taxable in income from other source

Computation of taxable part of Gratuity, in the case of employee covered by the payment of Gratuity Act 1972

Computation of taxable part of Gratuity, in the case of employee not covered by the payment of Gratuity Act 1972

Leave Encashment [Section 10(10AA)] :
Meaning of Leave Encashment

Govt. Employee - Fully exempt

Non. Govt. Employee - Partly Exempt

Important Note :

1. If Leave Salary received during the service period then it is fully taxable.

2. If Leave Salary is received by family member of employee due to death of employee then it is fully exempt.

3. Allowed period

Computation of Taxable Part of Leave Encashment

Pension [Section 10(10A)] : Meaning of Pension

1. Un commuted Pension

2. Commuted Pension

Computation of Taxable part of Commuted pension

Retrenchment Compensation [Section 10(10B)] : What is Retrenchment Compensation

Voluntary retirement compensation [Section 10(10C)]

Practical Problems and Solution

Illustration and Solution for better concept clear.